Ministers are finalising plans to radically reform the House of Commons, giving English MPs alone the final say on legislation that does not affect other parts of the Union.

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Under the proposals, vast swathes of the law, including health, education, parts of criminal legislation and the environment, would have to be approved by a majority of English MPs in order to come into force.

At the same time ministers are likely to agree to devolve many more powers to the Welsh Assembly, including the ability to vary income tax rates, alter stamp duty and borrow money. Scotland has also been promised more freedom from Westminster if the referendum on Scottish independence is defeated.

The plans – to solve what is known as the West Lothian Question – have been devised by the Conservative Cabinet Office Minister, Oliver Letwin, and the Liberal Democrat Chief Secretary to the Treasury, Danny Alexander.

They seek to resolve the problem whereby Scottish and Welsh MPs are able to vote on English matters which will not affect their constituents because powers in those areas have been devolved to the Scottish Parliament and Welsh and Northern Ireland Assemblies. However, English MPs have no say over laws in the devolved administrations.

The proposals will outrage the Opposition, which fears they are designed to sabotage a future Labour government. The shadow Cabinet Office Minister, Jon Trickett, described them as a “hair-brained scheme”.

Under the plans, believed to have the support of both Nick Clegg and David Cameron but which have yet to be formally agreed within the Coalition, Parliament would be asked to pass a resolution introducing a new stage to legislation affecting only England.

New Parliamentary standing orders – the written rules under which Parliament conducts its business – would introduce a “fourth reading” of Bills at which only English MPs would be able to vote, according to a source familiar with the plans. If English MPs rejected part or all of a piece of legislation, the measures would return to the House of Commons for further consultation or amendment.

While the changes would be unlikely to affect the Coalition’s legislative agenda as the Liberal Democrats and Conservatives command a majority of English MPs, the situation could have serious implications for the legislative agenda of a future Labour government. Labour has proportionally far more Scottish and Welsh MPs than the Tories or Liberal Democrats and could find themselves outvoted on any future NHS, education or local government reforms.

The plans appear to go further than proposals put forward by a commission headed by the former clerk of the House of Commons, Sir William McKay, which reported in March.

The commission said that English MPs should not be given a veto over laws passed by the government, to avoid destabilising Parliament and creating two classes of MP.

But it added that the overarching principle with England-only Bills was that any government should act with the consent of English MPs, unless it had good reason not to. The commission suggested a number of procedures could be used in the early stages of a Bill, including a grand committee of all English MPs; a special Bill committee set up to amend legislation; or separate votes on different clauses that might be England-only.

“The status quo clearly cannot be sustained,” Sir William said at the time.

Speaking of the new plans, a senior minister told The Independent: “The idea is to give English MPs the right to ratify legislation that concerns England. It would effectively create a ‘fourth reading’ of a Bill on English-only matters. Scotland has had devolution and is now voting on independence. Wales is going to get more powers. It would be wrong not to address the issue of England too.”

The minister added: “This is a neat solution to a problem that has not been satisfactorily addressed since devolution.”

A senior Tory source said the plans would be introduced after the summer and would be “consistent with the [McKay] report”. But insiders say the Government is prepared to “go further” than Sir William – who said the full House of Commons should have the final say on legislation.

A Downing Street spokesman said: “This is a very important issue, which is why the Government asked this expert commission to look into it. We will consider seriously and constructively this report and provide a substantive response to it in due course.”

What you need to know: The West Lothian questions (and answers)

What is the problem that needs fixing?

Ever since Labour transferred powers over health, education and other areas to the Scottish Parliament and the Welsh Assembly in the 1990s there have been concerns that English voters have not been properly represented by Westminster. Why should MPs outside of England be able to vote in Westminster on matters that don’t affect their constituents?

So why not just create an English Parliament?

That is one solution to the problem – but it is not popular with the public who see it as yet more costly political bureaucracy.

The last Labour government attempted to address the issue by introducing English regional assemblies – but after voters in the North-east resoundingly rejected a plan for an assembly there it was quietly dropped.

Why is the Coalition acting now?

Under plans to fight off a “yes” vote in the Scottish independence referendum, the UK Government has said it will transfer further powers to the Scottish Parliament in the event of a “no” vote. At the same time, the Coalition is planning to devolve further powers to the Welsh Assembly. This makes dealing with the so-called West Lothian question all the more pressing.

What is the plan in a nutshell?

The Coalition wants to give English MPs an effective veto on all Westminster legislation that does not affect Scotland, Wales and Northern Ireland. Under plans – which have yet to be finally signed off by David Cameron and Nick Clegg – a new “fourth reading” of such Bills would be introduced in Parliament which would only be voted on by English MPs.

Sounds sensible – what’s wrong with it?

Nothing if you are a Tory or a Liberal Democrat. However, Labour fears that it will mean if it wins a narrow majority at the next election the measure will be used to defeat its legislative agenda.

It has more Scottish MPs and may possibly not have enough English MPs to prevent the other parties from sabotaging its plans at the new fourth reading.

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